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SWUTC/06/473700-00027-1 October 2006 IMPORTANCE of SHORT Technical Report Documentation Page 1. Report No. 2. Government Accession No. 3. Recipient's Catalog No. SWUTC/06/473700-00027-1 4. Title and Subtitle 5. Report Date IMPORTANCE OF SHORT LINE RAILROADS TO TEXAS October 2006 6. Performing Organization Code 7. Author(s) 8. Performing Organization Report No. Jeffery E. Warner and Manuel Solari Terra Report 473700-00027-1 9. Performing Organization Name and Address 10. Work Unit No. (TRAIS) Texas Transportation Institute Texas A&M University System 11. Contract or Grant No. College Station, Texas 77843-3135 DTRS99-G-0006 12. Sponsoring Agency Name and Address 13. Type of Report and Period Covered Southwest Region University Transportation Center Research Report: Texas Transportation Institute September 2004-August 2005 Texas A&M University System 14. Sponsoring Agency Code College Station, TX 77843-3135 15. Supplementary Notes Supported by a grant from the U.S. Department of Transportation, University Transportation Centers Program 16. Abstract Short line railroads employ more than 20,000 persons, serve 11,500 customer facilities, and originate or terminate approximately 25 percent of all rail movements. A good portion of short lines also operate on rail lines that were previously unprofitable and are often the lifeline for many rural agriculture communities. Texas currently has 41 short line railroads that operate on more than 2,600 miles of track, which represents almost 20 percent of the state rail infrastructure. The remainder of the track is operated by the three Class I railroads in the state. Nationwide, there are seven Class I and 545 short line railroads. The Class I railroads are characterized by long distance movement of freight over high-density rail lines between major markets. The major commodities are usually transported over a few major lines that stretch across the country, similar to perhaps the interstate highway system. On the other hand, the short lines operate shorter distances with the primary focus being on serving the customers on the line. Short line railroads face many obstacles to efficient, profitable operations. But they also hold great potential, especially with their ability to work closely with shippers to quickly meet changing needs and provide high levels of customer service. This project examines the issues facing short line railroads, future opportunities, and the importance of these railroads to the state of Texas. 17. Key Words 18. Distribution Statement Freight Rail, Short Line Railroads, Railroads, No restrictions. This document is available to Shortline the public through NTIS: National Technical Information Service Springfield, Virginia 22161 http://www.ntis.gov 19. Security Classif.(of this report) 20. Security Classif.(of this page) 21. No. of Pages 22. Price Unclassified Unclassified 70 Form DOT F 1700.7 (8-72) Reproduction of completed page authorized IMPORTANCE OF SHORT LINE RAILROADS TO TEXAS by: Jeffery E. Warner Assistant Transportation Researcher Texas Transportation Institute Manuel Solari Terra Graduate Assistant Researcher Texas Transportation Institute Prepared for: Southwest Region University Transportation Center SWUTC/06/473700-00027-1 October 2006 Texas Transportation Institute Texas A&M University System College Station, TX 77843-3135 ABSTRACT Short line railroads employ more than 20,000 persons, serve 11,500 customer facilities, and originate or terminate approximately 25 percent of all rail movements. A good portion of short lines also operate on rail lines that were previously unprofitable and are often the lifeline for many rural agriculture communities. Texas currently has 41 short line railroads that operate on more than 2,600 miles of track, which represents almost 20 percent of the state rail infrastructure. The remainder of the track is operated by the three Class I railroads in the state. Nationwide, there are seven Class I and 545 short line railroads. The Class I railroads are characterized by long distance movement of freight over high- density rail lines between major markets. The major commodities are usually transported over a few major lines that stretch across the country, similar to perhaps the interstate highway system. On the other hand, the short lines operate shorter distances with the primary focus being on serving the customers on the line. Short line railroads face many obstacles to efficient, profitable operations. But they also hold great potential, especially with their ability to work closely with shippers to quickly meet changing needs and provide high levels of customer service. This project examines the issues facing short line railroads, future opportunities, and the importance of these railroads to the state of Texas. v EXECUTIVE SUMMARY Texas currently has 41 short line railroads that operate on more than 2,600 miles of track, which represents almost 20 percent of the state rail infrastructure. The remainder of the track is operated by the three Class I railroads in the state. Nationwide, there are seven Class I and 545 short line railroads. Within the past couple of years in several of the Class I railroads, including BNSF Railway Company that operates more than 4,600 miles of track in Texas, have indicated the likelihood of spinning off additional track not part of the major trunk system. The remaining lines would either be abandoned if extremely unprofitable or transferred to a short line operated via lease or purchase. This will make many of the lines serving predominantly smaller customers, and especially those in rural parts of the state, part of a short line operated system. Short line railroads in the U.S. employ more than 20,000 persons, serve 11,500 customer facilities, and originate or terminate approximately 25 percent of all rail movements. A good portion of short lines also operate on rail lines that were previously unprofitable and are often the lifeline for many rural agriculture communities. Railroads emit fewer harmful emissions than that of trucks and provide shippers with a vital option in choosing a shipping method, which helps reduce shipping rates. Short line operators are known for their customer service and ability to quickly adjust to changing shipper needs. Their specialized operations have the potential to better utilize the system and better serve the shippers and communities located along the route. FINDINGS This document examined the critical role the short line railroads play in Texas. Short lines provide an additional transportation option for goods throughout many rural parts of Texas, keeping trucks off rural highways. They also perform important switching operations within many of the Texas urban centers. In this document, Chapter 2 provides an overview of the U.S. rail industry, including the definitions of the different railroad classes. There are only seven Class I railroads operating in vii the U.S. The remaining 542 railroads operating in the U.S. are short lines, which include regional, local, and switching and terminal railroads. Some of the existing short lines have been around for more than a century, but approximately 60 percent of the current short lines in the U.S. are under 25 years old as a result of the Staggers Rail Act of 1980. This legislation allowed railroads to unload unprofitable line segments, either through rail line abandonment or selling the line for short line operations. In Texas, 28 of the short lines, or 68 percent, formed after 1980. The total miles operated by Texas short lines currently exceeds 3,200 miles. Some of the major challenges for short line railroads are covered in Chapter 3. These include the significant challenge of accommodating 286,000 pound railcars on their systems, deferred maintenance, capital investment needs, and infrastructure funding. The analysis performed for the 286,000 pound railcars found that more than 600 miles of Texas short line track consists of lightweight rail (less than 90 pounds per cubic yard). The approximate cost to upgrade the light rail track with rail replacement is up to $410,000 per mile. However, those costs greatly reduce to only $60,000 if the rail is adequate and only the other track components need upgrading. Total short line investment needs in Texas are calculated to be up to $250 million. Chapter 4 examines the viability of Texas short line railroads. Utilizing the density of the railroads as an indicator, the analysis categorized the Texas short lines into three density levels: low, middle, and high. Based on the density, a higher density level means there is a better chance for success. The analysis in Chapter 4 indicates 1,516 miles (51 percent) of Texas short lines have an excellent chance of success according to the density parameters. However, 1,387 miles (47 percent) of Texas short lines are not able to handle the 286,000 pound railcars. From these 1,387 miles: • 713 miles (51 percent) have low traffic density and account for 66 percent of the investment needs ($166 million); • 305 miles (22 percent) have medium traffic density and account for 17 percent of the investment needs ($41 million); and • 369 miles (27 percent) have high traffic density and account for 17 percent of the investment needs ($43 million). viii One of the major questions to ask refers to the public interest in short line railroads. Chapter 5 examines how some of the area’s short lines affect the public. One of the major areas is continued rail service of a previously unprofitable Class I railroad line segment. As stated in Chapter 2, 60 percent of the current short line miles have been added since 1980, when reduced regulation made it easier to abandon line segments. Not all lines were saved, and many of the short line operated lines are subject to future abandonment. The loss of rail service may be a serious issue for rural communities that rely on rail service for agriculture shipments. This is especially important considering a couple of challenges currently facing rural Texas.
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